Katerra files backed by SoftBank for failure

Katerra, the US construction start-up backed by SoftBank’s Vision Fund, has filed for bankruptcy with more than $ 1bn in liabilities, becoming the second largest company in the Japanese conglomerate’s portfolio to collapse this year. year.

In a statement, Katerra said it had sought the protection of creditors after a “rapid deterioration of the company’s financial situation”. He blamed Covid-19, the “unexpected insolvency” of its former lender Greensill Capital and the inability to secure new funding. The company said it will undertake a marketing and sales process “to maximize value for its players”.

Bankruptcy marks the latest return for SoftBank’s Vision Fund, which has recently had a strong run from the list of portfolio companies such as Coupang and DoorDash. The Vision Fund had invested more than $ 2 billion in Katerra, according to reports, including a cash infusion in December as part of a recapitalization.

Katerra had been a customer of Greensill, the supply chain financial company backed by SoftBank, which itself collapsed earlier this year. Katerra did not call Greensill into the statement.

Founded in Silicon Valley, Katerra has raised billions of dollars in an attempt to reduce construction costs by producing building components in factories rather than on site.

But the company has struggled to contain costs and has faced delays in several major projects. Internal drama brought to the departure of co-founder Michael Marks from his leadership role in May last year.

Katerra said it had received $ 35m of debt financing in its possession from SoftBank, allowing the company to continue to operate while the bankruptcy process takes place, and its international operations will not be affected by the bankruptcy. The company is estimated to have assets between $ 500m and $ 1bn and liabilities from $ 1bn to $ 10bn. SoftBank declined to comment.

The court filing in the state of Texas showed that Katerra earned about $ 1.75 billion in revenue last year. The company has nearly 2,400 employees, according to LinkedIn.

The collapse of Katerra has caused tensions between SoftBank and Credit Suisse, which sell funds that together add loans originating from Greensill.

Credit Suisse is trying to recover about $ 440 million in debts linked to Katerra that were held in the funds. In the Financial Times reported last week the Swiss bank was preparing for a potential litigation against SoftBank, one of its largest customers, following the collapse of Greensill.

In November last year, SoftBank provided an emergency cash injection to Greensill to cover debts in Katerra. However, the money never reached Credit Suisse funds as expected, the FT said reported.

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